You sent out your Notice of Creditable (or Noncreditable) Coverage by the November 15, 2005 deadline and now you think you’re done-at least for a year (or until you change your prescription drug coverage). Not so fast!
Employers who sponsor group health plans that cover any prescription drugs must tell the Centers for Medicare and Medicaid Services (CMS) by March 31, 2006, whether their drug coverage is creditable or noncreditable. This applies to health plans that cover only active employees as well as retiree plans. To comply, employers must complete an electronic disclosure form using the CMS Web site at http://www.cms.hhs.gov/CreditableCoverage. Because a high volume of activity on or near March 31, 2006 could make the site unavailable, you should make your disclosure as soon as possible.
If, after this initial disclosure, you terminate prescription drug coverage or change the coverage so that creditable coverage becomes noncreditable (or vice versa), you must do a new electronic disclosure within 30 days of the change (and also provide an updated notice to participants in your plan). In 2007 and beyond, you must submit the electronic disclosure form every year within 60 days after the first day of the plan year.
Employers required to make the disclosure. The CMS notice requirements apply to all employers (including churches, federal, state and local governments) who sponsor group health plans that provide some form of prescription drug coverage. There are a few limited exemptions for plans that contract with a Medicare Part D plan or that contract directly with Medicare to become a Part D plan, and for retiree plans where an employer has successfully applied for the retiree drug subsidy. No disclosures are required for health flexible spending accounts (FSAs) or health savings accounts (HSAs). Disclosure notices are required for Health Reimbursement Arrangements (HRAs) either on a stand-alone basis or, more likely, in connection with a high deductible health plan, if prescription drug expenses are covered. A parent corporation can submit one disclosure if the benefits are the same for all subsidiaries; otherwise, an additional form should be submitted for each subsidiary.
Information to be Provided. The electronic CMS disclosure form asks for the following information:
- The name, street address and telephone number of the employer sponsoring the plan;
- The employer’s EIN;
- Type of coverage, which for employers will be “group health plan”;
- The number of different benefit options available (e.g, HMO, PPO, etc.);
- Whether each benefit option has creditable or noncreditable prescription drug coverage;
- The beginning and ending date of the plan year;
- An estimate of the number of Part D eligible (Medicare) individuals covered by each option as of the beginning of the plan year;
- The date the notices of creditable or noncreditable coverage were provided to Part D eligible individuals (or if provided over a range of dates, the last date it was provided), and if the status of coverage has changed, the date of the change;
- The name, title and e-mail address of the authorized individual employee submitting the electronic form, and the date the form is submitted.
If you have any questions about the creditable coverage disclosure to CMS, or about Medicare Part D generally, please contact a member of WN&J’s Employee Benefits Practice Group.
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Norbert F. Kugele is a partner in the Grand Rapids office of Warner Norcross & Judd LLP. He specializes in the areas of employee benefits and privacy, particularly with respect to health records and privacy issues relating to the Internet. He also counsels clients on computer, copyright, and e-commerce and intellectual property litigation. Norbert is Chair of the Firm’s HIPAA Task Force and Co-Chair of the Firm’s Privacy and Information Security Taskforce. Norbert may be reached at 616.752.2186. Warner Norcross & Judd is a full-service law firm with offices in Grand Rapids, Holland, Metro Detroit and Muskegon. Because each business situation is different, this information is intended for general information purposes only and is not intended to provide legal advice.